ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
June 19, 2008

As the Board knows, together with others across the nation we have been advocating strenuously for Congress to extend a prior moratorium and to impose further moratoria on a series of seven pending CMS regulations that would drastically cut essential Medicaid funding, including three regulations that directly impact HHC and other public hospitals and threaten HHC with the loss of roughly $500 million in federal reimbursement annually. Earlier this year, the House and the Senate both voted to include such moratoria in their respective versions of the Funding Supplemental Bill related to the Iraq war.

However, it is now clear that negotiation with the White House on a final bill has resulted in only six of the seven CMS regulations remaining in the moratoria provisions of the House Funding Supplemental Bill. The Outpatient Upper Payment Limit (UPL) regulation has been omitted from the moratoria language. The practical effect of this regulation would be to limit certain supplemental Medicaid payments, including some portion of current disproportionate share hospital (DSH) and UPL payments related to the provision of dental and vision services and the rendering of Graduate Medical Education services in outpatient settings. We estimate that the outpatient regulation puts $120 million in annual federal reimbursement at risk for HHC, would lead to the loss of $300 million in federal funding across New York State, and would result in similar losses for safety net providers and states across the nation.

The final House bill will shortly go back to the Senate, where it is expected to be approved in its current form, although we continue to advocate on the Senate side for re-inclusion of the outpatient regulation. We are discussing options, including possible litigation, should CMS decide to go forward and publish the final rule. I will keep the Board informed of these critical developments as they unfold.

From June 9 to 13, The Joint Commission conducted its triennial unannounced survey of Woodhull Hospital. Five surveyors conducted a rigorous 5-day "roof to basement" review of the hospital and its operations. The Woodhull team performed extraordinarily well and received accolades from the surveyors. There were minimal requirements for improvement, primarily related to documentation, and there were no requirements for improvement related to the direct provision of patient care. I commend the Network Senior Vice President Iris Jimenez-Hernandez and all of her medical staff and employees for the facility's stellar survey performance.

North Central Bronx Hospital and Coler-Goldwater Hospital and Nursing Facility remain to be surveyed by The Joint Commission this year.

The Hospital Association of New York State (HANYS) has announced its 2008 Pinnacle Award winners, and HHC has garnered an impressive 4 of the 18 top awards for Quality and Safety. HHC's North Bronx Healthcare Network, which includes Jacobi Medical Center and North Central Bronx Hospital, won the Pinnacle Award in the Specialty Unit category, for the outstanding success of its Violence Reduction Protocol in psychiatric services. Results of the program included a 36% decrease in patient injuries, a 75% reduction in staff injuries, a 33% reduction in the use of restraint, and a 9% reduction in the use of seclusion. The North Bronx Network has also won two Top Ten Percentile awards in Quality and Safety from HANYS for the work at North Central Bronx Hospital that has led to a 34% decline in ICU mortality and the work at Jacobi Medical Center that has led to reduced rates of both central line infections and ventilator-associated pneumonia.

Significantly, the entire HHC system has been recognized with a HANYS Top Ten Percentile award for our corporate-wide patient safety initiative, described in a submission entitled "Inventing a Roadmap: Qualitative and Quantitative Aspects of Patient Safety Culture Change in a Large, Complex, Multi-facility, Healthcare System."

HANYS also awarded an honorable mention for Community Health Improvement to another HHC program, the Artist Access program of Woodhull Medical and Mental Health Center. The program enrolls local artists in the HHC Options program, and gives them credit for their services as artists to be applied as payment for needed healthcare and dental services. Woodhull has partnered with local arts organizations to develop the program and has enrolled nearly 400 local artists over the past two years.

Congratulations to all our dedicated staff for the hard work that led to these recognitions, and more importantly, for helping to lead the way toward ever safer and higher quality care, as well as broader access to those who need our services.

Last month, the New York State Commissioner of Health issued a directive that effective October 2008, New York State’s Medicaid program will no longer pay for the cost of care associated with 14 types of medical errors or hospital acquired conditions known as “never events.” Never events are serious, largely preventable adverse events that occur in healthcare settings.

Hospitals receiving payment under New York State’s Medicaid program will be required to ensure that the cost of care associated with any such “never events” are not billed to Medicaid. Broadly, the 14 preventable conditions that New York State Medicaid has identified as non-reimbursable include surgical errors, medication errors, air embolism, blood incompatibility, and patient disability from electric shock, contaminated drugs, burns and use of restraints or bedrails.

It is anticipated that the Department of Health will continually review this list, and that it will be modified and expanded over time. HHC is currently assessing the potential impact of the new directive, but based upon our experience in recent years, we believe the impact should be minimal.

As I have reported to you on previous occasions, following the collapse of the auction rate securities market in February, HHC began restructuring $346 million in outstanding auction rate bonds. The strategy for converting these bonds has been developed in close consultation with HHC’s underwriters, financial advisor, bond counsel, and colleagues from NYC OMB and the Comptroller’s Office.

In the last week of May, HHC held presentations for all three rating agencies and is now awaiting confirmation of its bond ratings. In the meantime, all relevant bond disclosure documents are being updated, and HHC’s March 31, 2008 financial statements are being audited and certified by our outside auditors, KPMG. It is anticipated that the Official Statement for the 2008 Series Bonds will be released approximately 1-2 weeks after the adoption of the City budget later this month, with the target date of the last week of July to issue these bonds. Marlene Zurack, SVP for Finance, will be presenting more details in a Board Resolution, later on today’s agenda.

At the end of last month, HHC launched the HHC Connectx program, with a system-wide roll-out of HHCAdvantage, the web-based community referral management system designed to facilitate access for community providers and their patients to our hospital specialty services. Facility-specific promotional materials about HHC Connectx have been developed for community doctors throughout the City. Local providers can also learn about the program through the newly launched HHC Connectx Web site, nyc.gov/hhcconnectx.

As you know, community physicians treat many of the 1.3 million patients we serve, yet many of them are not aware of the extensive specialty services available at HHC facilities. With HHC Connectx we will strengthen our partnership with community physicians, allow them to take advantage of the many benefits our large system has to offer, and ultimately improve patient care through a more collaborative approach.

Since May 19, training in the use of the HHCAdvantage program has been completed at 8 practices with a total of 75 providers and users. We expect that the accelerated training schedule we are establishing will help us link to a total of approximately 390 community provider sites by the end of the year.

HHC has received two "Silver Communicator Awards" for creative excellence presented by the International Academy of Visual Arts. The awards were given in the print advertising category for our colon cancer awareness campaign featuring New York "Subway Hero" Wesley Autrey, and a second was awarded in the health/wellness video category for our WTC Environmental Health Center educational promo video. The award is 15 years old and this year attracted 8,500 entries. Congratulations to the Office of Communications and Marketing for these well-deserved kudos.

On our agenda today for your review and approval is an affiliation contract renewal with New York Medical Alliance (NYMA) for the provision of general care and behavioral health services at Jacobi Medical Center and North Central Bronx Hospital.

The proposed agreement will compensate NYMA based on costs, and no increases can be made without approval of a Joint Oversight Committee at the facility. Also, over the life of the contract, $3,000,000 for incentives will be available to compensate staff for surpassing productivity goals. The parties propose to add pay-for-performance incentives aligned with improvement in regulatory compliance, satisfaction of federal quality indicators, and facility-specific measurements of quality and efficiency.

The agreement is a three-year contract from July 1, 2008, to June 30, 2011, for a total contract cost of $367,581,000.

Pursuant to HHC Operating Procedure 100-5, on June 18 I granted a deviation from our standard procurement procedures to enable an expeditious award of a professional services contract to the New York Academy of Medicine. The Academy is a non-profit organization dedicated to the furtherance of public health in America's cities. The contract, which shall not exceed $500,000, is funded entirely by a discrete appropriation from the City of New York to expand services to patients suffering adverse health consequences stemming from the aftermath of the 9/11 attack on the World Trade Center. It will cover the production of video, audio and print media designed to inform the public of the expanded services now available at the WTC Environmental Health Center at Bellevue as well as the recently funded related programs at Elmhurst Hospital and Gouverneur Diagnostic and Treatment Center.

The rates negotiated with the Academy for production and placement services are below those rates that we have been charged over the last few years following competitive procurement of similar services.

• On June 3rd HHC's Office of Behavioral Health held its annual conference, titled "Advancing Best Practices in Behavioral Healthcare: Addressing Complex Issues." An expert panel addressed the assessment and treatment of agitation and dangerousness in emergency, inpatient and community psychiatric settings. A number of break-out sessions were subsequently held, led by HHC staff, who shared best practices. In addition to awards for facility staff and consumer advocates, two Presidential Awards were also given. Manuel Trujillo, M.D., former Director of Psychiatry at Bellevue Hospital Center, received recognition for his outstanding leadership in transforming behavioral health services at HHC. The second award went to LaVerne Miller, Esq., Executive Director of the Howie the Harp Peer Advocacy Center in New York City, for outstanding leadership and support in developing peer counselors at HHC. This year's event broke the record with 271 participants. I would like to thank Ms. Josephine Bolus for her participation as well as Dr. David Rosin for his remarks and participation.

• More than 250 healthcare professionals attended the First Annual Lorraine Tregde Patient Safety Leadership Conference. Nearly 20% of the participants were from organizations other than HHC. The conference was named in honor of Lorraine Tregde, who spoke eloquently at the event, and who, in her twenty-year history with HHC, served as Executive Director of 7 HHC facilities. The event was co-sponsored by the Greater New York Hospital Association (GNYHA).

• From May 16 to 18, the Association of Black Cardiologists (ABC), in conjunction with Harlem Hospital Center and the Harlem Healthy Living Initiative, held its community-based Super Weekend program, "Taking Steps Towards Better Health," in the Harlem community. The three-day event focused on raising awareness about heart disease and empowering communities to take action in preventing cardiovascular disease, through support for healthier lifestyles, habits and behaviors.

• In recognition of National Mental Health Month, on May 28, Harlem Hospital Center, hosted a panel discussion, moderated by Dominic Carter, NY1 television Political Reporter. More than 225 attendees came out to hear panelists discuss mental health issues and coping strategies. The panelists included, patient advocate Sil Lai Abrams, actor and producer Mel Jackson, and Terrie Williams, author of the best-seller "Black Pain."

The medical community continues to recognize our facilities and our outstanding staff for their achievements in patient-centered healthcare.

• The National Association of Public Health and Hospital Systems (NAPH) has awarded a 2008 Safety Net Award Honorable Mention to Lincoln Medical and Mental Health Center in the category of Reducing Health Care Disparities, for its program "Improving Access To Care For Hispanic and Black Adolescents in The South Bronx; A Low-Cost Service Model."

• Kings County Hospital Center (KCHC) was recognized for its efforts and achievements in recruiting one of the most ethnically-diverse residencies in the country at the Society for Academic Emergency Medicine’s annual meeting held last month. KCHC has the highest percentage of minority residents in the country, a notable and important achievement. In addition, Doctors Richard Sinert and Shahriar Zehtabchi of KCHC were elected to the editorial board of Academic Emergency Medicine, the official journal of the Society. The journal publishes peer-reviewed information relevant to the practice, educational advancement, and investigation of emergency care and is widely regarded as the most prestigious emergency medicine publication by the medical profession.

• Representatives from Sea View Hospital Rehabilitation Center and Home were invited to present the facility’s “Flu Blitz” Quality and Safety Initiative at a poster session at National Patient Safety Foundation’s Annual Conference held in Nashville last month. The Foundation is dedicated to improving patient safety and reducing medical errors through research, education and dissemination of programs.

• Several doctors from Jacobi Medical Center were honored for their work as clinicians, researchers and teachers at the 50th Commencement Ceremony of Albert Einstein College of Medicine of Yeshiva University which took place at Lincoln Center's Avery Fisher Hall on June 5. Dr. Douglas Simon, Gastroenterology, was the recipient of the Harry Eagle Award for Outstanding Basic Science Teaching. Dr. Mark Mehler, Neurology, was the recipient of the Dominick F. Purpura Distinguished Alumnus Award and Dr. Rachel Katz, Pediatrics, was this year’s recipient of the Samuel Rosen Award for Outstanding Teaching in Clinical Curriculum. In addition, five Jacobi physicians were appointed members of the Leo M. Davidoff Society, which honors teachers who like its namesake, made significant contributions to the education of students at the Albert Einstein College of Medicine.

• Dr. Richard K. Stone, Metropolitan Hospital’s Medical Director and Senior Associate Dean at New York Medical College, received the prestigious Leonard Tow Humanism in Medicine Award from the Arnold P. Goldstein Foundation. The award is presented to students and faculty members at medical schools who best demonstrate the Foundation's ideals of outstanding compassion in the delivery of care, respect for patients, their families, and healthcare colleagues, as well as excellent clinical skills. Dr. Stone, a pediatrician, has been Metropolitan Hospital’s Medical Director since 1989 and is committed to the hospital’s mission of training future doctors. He was a medical student himself when he first walked into Metropolitan in 1966 and except for a two-year stint in the Army has been there ever since.

Elmhurst Hospital Center hosted community-based organizations from Germany that were interested in learning how Elmhurst serves its highly diverse multi-cultural patient population. The group, which was invited to Elmhurst by the New York Committee for Occupational Safety and Health and the Ecuadorian International Center, was particularly interested in the hospital’s interpretation services, use of patient navigators and community outreach.

On May 31 HHC fielded over 1,000 walkers in the American Lung Association's Asthma Walk in Battery Park. Numbers are still preliminary, but we already know that HHC more than doubled the funds raised last year, bringing in more than $157,000, shattering our previous corporate best of $68,000, and surpassing by a wide margin all other teams. Congratulations to Bellevue and Lincoln hospitals for bringing in more than $32,000 each, and to Harlem, Woodhull, Metropolitan, Kings County and Coney Island, who each raised more than $10,000. Special thanks also to Dr. Arnold Saperstein, Dr. Van Dunn, and the MetroPlus team, for their corporate sponsorship of this event. HHC received two awards at Tuesday's recognition by the American Lung Association - for top Corporate Sponsor and best overall team, while the award for best employee group went to our Generations Plus/Northern Manhattan Health Network. Once again, a hearty thank you to all involved staff for their contributions to this wonderful cause.

• May 30 – The New York Times reported on the stark differences between end-of-life care provided by New York City’s voluntary and public hospitals. Data compiled as part of Consumer Reports’ new consumer rating system noted most elderly patients in their last two years of life receive more intensive treatment, tests, and hospitalization, and have higher out-of-pocket costs at private teaching hospitals than the city’s public hospitals. Dr. Eric Manheimer, Medical Director of Bellevue Hospital Center, noted that at private hospitals supply could create its own demand given the abundance of both beds and specialists who can be called. He also noted that the majority of physicians working in the city’s public hospitals were salaried, and that having a cohesive physician staff that works together - with no incentive to provide additional health care - offers a different mental model.

• June 6 – The New York Times reported on recent City Health Department data that indicates the number of New Yorkers 50 and older that have undergone a colonoscopy increased nearly 50 percent in five years. The article notes innovations such as the use of patient navigators have helped drive the increase. Lincoln Medical and Mental Health Center’s Elithea Maysonet noted that because of the navigator program the no-show rate decreased from 67 percent down to 10 percent, while screening rates tripled in the initial year.